European Commissioners Padraig Flynn (Industrial Relations, Employment and Social Affairs) and Mario Monti (Internal Market) have welcomed the final report of the Davignon Group which suggests ways of breaking the twenty-five year long deadlock over the issue of worker involvement in the Commission proposal for a European Company Statute. The report suggests that the social partners concerned should first try to agree on the system of worker involvement for each European Company, but if they do not manage to reach agreement, a set of reference rules should apply. The report will be presented to the Commission on Wednesday 14 May, to the Internal Market Council on 21 May and to the Social Affairs Council on 12 June.

The High Level Group of Experts chaired by Etienne Davignon have suggested in their final Report (see Annex attached for main points) that priority should be given to free negotiation between the parties directly concerned, as to the system of worker involvement which should apply to each European company. It is only in the absence of an agreement between these parties that a set of reference rules would apply, covering both information/consultation and the participation of workers in the relevant company bodies.

The Report is the result of six months of exhaustive analysis of the complex reasons behind the lack of progress for twenty five years on Commission proposals containing clauses on worker involvement and, in particular, the European Company Statute.

The Report will be presented to the Commission on 14 May by the two Commissioners who set up the Davignon group in November 1996, Padraig Flynn (Industrial Relations, Employment and Social Affairs) and Mario Monti (Internal Market). It will also be presented to the Internal Market Council on 21 May and to the Social Affairs Council on 12 June.

Commenting on the Report, Commissioners Flynn and Monti said that they were pleased that the Davignon Group had been able to tackle all the main issues and still adopt its report unanimously. The solutions suggested in the report constitute a good basis for a fresh start of the debates on the European Company Statute. They are designed to meet the concerns of all the interested parties, by opening up the prospect of a new option for companies and a legal framework to cover their European operations, while maintaining an important social dimension.

Background

The main issue at stake is that of worker participation. A solution has to be found which will meet the concerns of the countries with advanced participation systems who fear that the European Company Statute will be used by companies to circumvent national rules in this area. At the same time, this solution will have to avoid imposing foreign models upon Member States where the direct appointment of workers representatives to the board of companies is not a common feature.

On 14 November 1995, the Commission adopted a Communication on worker information and consultation, seeking the opinion of the Council, the European Parliament, the EU Economic and Social Committee and the social partners at Community level on the different options available.

One option was to adopt a new Community framework for information and consultation of workers at national level. The other options were based on applying the mechanism provided for in the European Works Council Directive of September 1994 to the new European entities envisaged (the European Company, the European Association, the European Mutual Society and the European Co-operative Society). In this case the directives annexed to the statutes, which provide for different models of worker involvement, would be dropped in favour of a solution along the lines of the European Works Council directive.

But the debates which followed the Commission's Communication made it clear that the mere application of the mechanisms provided for in the European Works Council Directive was not sufficient to overcome the opposition of a number of Member States and social partners to the adoption of the regulation on the European Company Statute.

The decision to establish the High Level Expert Group, under the chairmanship of Etienne Davignon, was based on specific requests from different participants in this debate and aimed at exploring the possibility of identifying a solution which met everybody's concerns.

Group's Membership

The Chairman of the High Level Expert Group, Etienne Davignon, is President of Société Générale de Belgique and former Vice-President of the European Commission.

The other members of the Group are :-

· Mr Ernst Breit, former President of the German Trade Union Confederation (DGB) and of the European Trade Union Confederation;

· Mrs Evelyne Pichot, consultant in European industrial relations, rapporteur for the Group of Experts;

· Professor Silvana Sciarra, specialist in comparative law and European labour law at the University of Florence and the European University Institute, Florence;

· Mr Rolf Thüsing, member of the Executive Board of the Confederation of German Employer's Associations (BDA) and Vice-President of the UNICE Social Affairs Committee;

· Professor Alain Viandier, specialist in company law at the Faculty of Law, University of Paris V.

-Annex-

Summary of the main points in the Report of the High Level Group of Experts on "European Systems of Worker's Involvement"

In order to make a contribution capable of re-launching the debate on the European Company Statute, the Group decided to take a a step-by-step approach and to select the themes likely to bear most fruit. In this context, the main issues discussed and the relevant findings of the Group are as follows:-

1. The Group's work has focused entirely on the European Company Statute (ECS). It suggests that future work should concentrate on three of the four options for creating a European Company (SE) currently provided for in the ECS Regulation, namely the holding, the common subsidiary and the result of a merger. All these would bring together partners in different Member States and thus have added value in cross-border terms. The fourth possibility - the transformation of an existing company with cross-border structures - would be left on one side. This is mainly designed to reduce the area of anxiety about the "flight" of companies from countries with more advanced participation systems.

2. The Group's analysis of national systems shows that there are more differences than similarities and that it is difficult to weigh their equivalence. The Group concludes that there is no "ideal system" and that general harmonisation is not possible.

3. Given the variety of national systems, the different combinations of national systems that might exist in a particular SE and the range of specific characteristics that any SE might have, the best systems of worker involvement is, in the Group's view, the one that is negotiated on an ad hoc basis for that SE. Negotiation between management and the representatives of the workers is therefore the strongly preferred route.

4. Negotiation would be compulsory, but to make sure that it happens in practice and that both sides negotiate seriously, there would be a time-limit to the negotiation (within 3 months of the approval of the creation of the SE by the general meetings of the participating companies) and on the expiry of the time-limit, reference rules would apply.

5. The negotiation would begin before the registration of the SE, as soon as the boards of the founding companies have agreed on the proposal to form the SE. If the formalities for forming the SE are completed before the negotiation is concluded, registration goes ahead anyway and interim worker involvement rules apply. The time-limit can be extended by common accord, but not indefinitely (for up to a year).

6. The rules for selecting the negotiators on the worker's side would be based on those in the European Works Councils (EWC) Directive. The representative negotiating body would represent all the different national units involved.

7. The negotiators are free to agree what they like and are not subject to any minimum rules.

8. The rules which would apply if no agreement is reached would be the same for all SEs. The Group considered the idea of different sets of rules depending on whether one or more of the companies founding the SE had worker participation in its decision-making structure : then and only then would the SE rules prescribe participation. But in the end, the Group opted for one set of rules as being simpler, less discriminatory and in any case not compulsory (the SE itself is only an option).

9. The rules would include information and consultation rules which represent a strengthening of those in the EWC Directive.

10. In addition, worker representatives would have the right to be full members of the board or the supervisory board (in a two board system). The Group suggest that one fifth of the seats on these bodies (and at least 2 seats) should be reserved for member designated by the workforce.